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HSI’s Sophisticated Tactics for Following Illicit Money Trails
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HSI’s Sophisticated Tactics for Following Illicit Money Trails
Money laundering allows criminals to hide and move illicit funds through the financial system. Homeland Security Investigations (HSI) uses sophisticated tactics to track these illicit money trails and disrupt criminal organizations. This article will examine HSI’s key strategies for combating money laundering and other forms of illicit finance.
Placing Funds into the Financial System
The first step in money laundering is placing criminal proceeds into the financial system. This entry point creates a vulnerability that HSI exploits. HSI focuses on identifying suspicious deposits, wire transfers, and other transactions that may indicate criminal activity. For example, HSI looks for cash deposits just under $10,000, as this amount triggers reporting requirements. Criminals often structure deposits to avoid detection, so HSI analyzes account activity patterns to uncover this behavior.
HSI also scrutinizes trade transactions, as trade-based money laundering is a massive challenge. Criminals falsify invoices and shipments to justify transfers of illicit funds. HSI combats this by identifying suspicious trading partners, shipment routes, commodity types, and pricing discrepancies. HSI’s Trade Transparency Units examine trade data to detect anomalies indicative of money laundering.
Layering and Integration
After placing illicit money into the financial system, criminals use layering techniques to obscure the funds’ origin. This often involves rapidly moving funds through shell corporations, foreign bank accounts, and other intermediaries to create confusion. At the integration stage, laundered proceeds are reintroduced into the economy to appear legitimate.
To combat layering and integration, HSI uses data analysis tools to reveal connections between accounts, businesses, transactions, and associates. This helps uncover complex money trails despite criminals’ obfuscation attempts. HSI also collaborates with financial institutions to identify typologies and indicators associated with specific laundering methods. Ongoing public-private partnerships generate critical intelligence to target illicit finance networks.
Bulk Cash Smuggling
Bulk cash smuggling continues to be one of the most prevalent money laundering methods. Criminals often transport large quantities of illicit cash across borders to deposit into foreign bank accounts. HSI counters bulk cash smuggling through targeted enforcement operations at ports of entry, transportation hubs, stash houses, and other locations.
HSI’s National Bulk Cash Smuggling Center analyzes data to identify strategic locations for anti-smuggling efforts. HSI also employs canine teams trained to detect concealed currency. These efforts make bulk cash smuggling more difficult, risky, and costly for criminal groups.
Emerging Technologies
As financial systems evolve, so do the methods for moving illicit funds. Criminals increasingly leverage emerging technologies and virtual assets to launder money. For example, the anonymity of cryptocurrencies helps obscure transactions. Criminals also use online payment platforms, mobile banking, and stored value cards to move criminal proceeds.
HSI proactively identifies how new technologies and financial innovations could enable money laundering. HSI partners with FinTech and RegTech firms to understand the risks and develop solutions. HSI also provides training to ensure agents can trace laundering involving emerging methods like cryptocurrency exchanges and online payment systems.
Multi-Agency Collaboration
Given the complex and global nature of money laundering, HSI does not work in isolation. HSI collaborates closely with various partners in a whole-of-government approach.
Domestically, HSI participates in multi-agency task forces like the Organized Crime Drug Enforcement Task Forces (OCDETF). These cooperative teams conduct complex investigations that combine resources and expertise from federal, state, and local agencies.
Internationally, HSI partners with governments worldwide through vetted units, joint investigations, and legal attache offices. These partnerships facilitate information sharing and coordinated enforcement actions against transnational money laundering networks.
Asset Seizures
Seizing illicit assets and proceeds is a powerful tool for dismantling criminal organizations. Depriving criminals of their profits through forfeitures and seizures limits their ability to continue illegal operations.
HSI strategically follows the money trail to identify assets derived from criminal activity or used to facilitate crimes. HSI seized over $776 million in assets from criminals in 2019. Targeting illicit wealth complements HSI’s efforts to arrest key figures and disrupt money laundering operations.
Holistic Approach
While targeting money laundering itself, HSI also focuses on the underlying crimes that generate illicit proceeds, such as drug trafficking, fraud, human trafficking, smuggling, and public corruption. Using financial investigation techniques against these broader criminal threats maximizes impact beyond just disrupting money laundering.
This holistic approach recognizes that following the money provides a roadmap to dismantle entire criminal networks. As criminals increasingly rely on sophisticated laundering methods, HSI continues adapting its financial investigation strategies and tools.
HSI’s success stems from surging resources into fighting illicit finance, leveraging advanced data analytics, forming public and private partnerships, and creatively applying strategies used against traditional money laundering to combat emerging threats. HSI’s wide-ranging efforts to track and disrupt money laundering inflict major damage to criminal organizations and help keep the public safe.
References
[1] Using a financial attack strategy to combat human trafficking
[2] Disrupt Terrorist Financing
[3] Combating Money Laundering and Other Forms of Illicit Finance
[4] National Strategy for Combating Terrorist and Other Illicit Financing 2018